Morphogens are molecules that specify different cell fates at distinct concentration and signaling thresholds. These "form generating" molecules provide a fundamental mechanism of generating pattern during tissue assembly. Members of the bone morphogenetic protein (BMP), Wnt, and Hedgehog families of growth factors, long known to be essential for developmental patterning and involved in many disease processes, also behave as morphogens. An in depth understanding of how tissues are assembled and repaired, therefore, requires insight into the molecular mechanism of morphogen gradient establishment and maintenance. While it has established that heparan sulfate proteoglycans (HSPGs) affect patterning events specified by morphogens, only recently has it been appreciated that HSPGs control morphogen gradients per se. Glypicans are a family of integral membrane proteoglycans known to affect growth control and patterning from humans to nematodes. Two Drosophila proteoglycans, Dally and Dally-like (Dlp), have been shown to control the disposition of the morphogens, Decapentaplegic (Dpp), a BMP4 homolog, and Wingless (Wg), during wing development. We propose a detailed biophysical and molecular genetic analysis of how Dally and Dlp control morphogen gradients. These studies include parallel experiments measuring the molecular interactions of these proteoglycans with morphogens and morphogen receptors, along with in vivo analysis of their effects on morphogen distributions, signaling and turnover in the developing wing. Dally and Dlp show qualitative and quantitative differences in their capacity to affect Dpp and Wg distribution and we wish to understand the molecular basis of these differences. In sum, we propose the following objectives: Aim 1: Determine the physical interaction of Dally and Dlp with morphogens and morphogen receptors using a variety of biophysical measures that provide kinetic and affinity data; Aim 2: Compare the differential activities of Dally and Dlp in affecting morphogen signaling and distribution in vivo and the structural basis of those activities; Aim 3: Measure the effects of Dally and Dlp on morphogen movement and turnover in vivo.